This will be the first time that Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O), Alphabet Inc (GOOGL.O) et Facebook Inc (FB.O) are releasing their financial results the same day and investors are wondering if they can deliver enough to prolong a rally that has been at the heart of Wall Street’s rally since March.
Winners deemed ‘stay at home’ as millions of Americans are ordered indoors to contain the COVID-19 pandemic, the actions of big tech players have reached record highs as the S&P 500 benchmark .SPX is up less than 1% over the year.
But with many Apple stores still closed and Amazon’s e-commerce costs skyrocketing, there are question marks, and some on Wall Street say stock prices for all four have been inflated beyond rational evaluations.
Actions of Microsoft Corp (MSFT.O) fell 4.4% the day after its report last week, despite better-than-expected cloud earnings and its stock is now nearly flat on the month after hitting an all-time high in early July.
“It’s just a boost,” Leo Kelly, founder of Verdence Capital Advisors, told the Reuters Global Markets Forum, ahead of the expected results after the closing bell.
“When you have stocks that seem to fit into a bubble, what you don’t know is how far they will go. You can’t just look at the assessment and say “it’s going to fall”. It can go anywhere and the risk becomes extremely, extremely high.
Alphabet’s Google and Facebook received particularly sharp hits on Wednesday from Democrats and Republicans who say they have crippled smaller rivals in the quest for market share, the latest hits in an increasingly threatening regulatory landscape.
Apple’s headache is a slowdown in hardware sales as the world slips into recession, with analysts predicting disruptions from a pandemic to see revenue drop by around 3% and iPhone activity by nearly 14%.
Likewise, Facebook and Google are facing a collapse in marketing spending. Refinitiv analysts believe Facebook could generate its slowest revenue growth – around 3% – since going public.
Yet despite the surge in stock prices raising the specter of a new tech bubble – Amazon is up 64% this year and the rest 13% to 29% – analysts remain confident about long-term growth prospects. of the four companies.
“Even bears will say these are great companies and won’t stop being great,” said Nicholas Colas, co-founder of DataTrek Research.
“The unifying factor is that they have the ability to both grow and control their cost structures during the pandemic. It is always a good starting point in the event of a slowdown. “
Report by Sagarika Jaisinghani and Neha Malara in Bengaluru; additional reports by Lisa Pauline Mattackal in Bengaluru and Noel Randewich in San Francisco; Edited by Patrick Graham, Bernard Orr
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